Claiming the future: technological gizmos can help insurers reduce claim costs and retain customers.

Property/casualty insurers continue to battle the same claims processing demons: how to control losses, reduce cycle times, cut costs, increase productivity, maximize technology investments and detect fraud.

For years insurers have been advised of the magic bullets that will kill these demons, and technology has advanced to the stage where upgrading information technology systems is inevitable and most of the major players have updated as many systems as feasible.

Many insurers employ the following technological magic bullets either wholly or to some degree:

* Outsource call-center operations;

* Outsource some or all claims adjustment functions;

* Equip adjusters with laptops and mobile devices that allow accessibility to corporate data and applications to capture most of the information for processing a claim in the field;

* Use scheduling, mapping and routing software to efficiently dispatch adjusters; and

* Integrate repair shops into the system so adjusters can suggest a facility closest to the customer for convenience and allow for speedier repair time.

Even if a carrier has outsourced as many aspects as possible and implemented all these software and mobile technologies, there is still room for improvement. The January 2001 Forrester Report, "The Virtual Claim," reported carriers required a minimum of three weeks to process a claim from the first report of the loss to the return of the repaired vehicle. Worse yet, there can be as many as six handoffs to assign an adjuster when a claim is reported.

While every company handles claims differently, the hand-offs usually start with the insured calling the carrier or reporting the claim. Prioritized at a claim center, the claim is assigned to a specific insider adjuster, perhaps even an outside adjuster. Upon completion, the claim may go to a processing center for payment and, after closure, it is likely to be sent off for archiving.

Insurers also must deal with keeping their customers happy. This is becoming increasingly difficult as customers demand competitive pricing, adequate coverage and 24-hour customer service. Auto insurers are lambasted for their inefficiencies by customers on such Web sites as badbusinessbureau.com.

Customers cite examples of how long it takes to get an adjuster assigned to them, how far they have to go to get their vehicle repaired, how communication is lacking and how long it takes to get paid for damage repairs.

The future of claims adjustment may not mean more implementation of hardware and software, and it may not mean cuts in staff to return profits and increase customer loyalty. Plenty of new technology making a splash in other industries may soon be tweaked to provide measurable benefits to insurance carriers and their customers.

Automated Alerts

Effective communication is one way to increase customer satisfaction. Typically, the call center is the first way an insurer interfaces with a client after a loss. Yet, after the initial phone call, plenty of procedures are set into motion to get the loss resolved. By using automated alerts, the carrier can provide communication to the customer throughout the phases of the claim's process.

These automated alerts could be in the form of an e-mail, a text message to mobile phones or even a phone call. Alerts can provide an option that allows clients to speak to an agent if they have questions.

Alerts could provide clients with updates on their claim's status, such as, "An adjuster will call to schedule a visit with you," "The repair shop found more damage, and we have paid them to ensure proper repairs," or "Your claim is complete and we are sending you a check today."

Alerts are a low-cost means of communicating to customers and can be delivered at a fraction of the cost of an agent-handled call. By using alerts in place of call-center staff, operating costs can be reduced.

Claims Adjusters

Claims adjusters are true road warriors. They use laptops and printers and likely coordinate with the carrier for dally scheduling and routing of client visits, but how efficient is all this activity? At the end of the day adjusters frequently spend several hours completing and filing paperwork.

It is tough being an adjuster. The customers they meet are already agitated, and if they are late to a client appointment, customer satisfaction goes down exponentially. After estimating damages, taking pictures and completing paperwork to provide clients with their copy of the estimate, adjusters must tell them a check will come in a couple of weeks.

To realize the benefits of a mobile work force, field employees must have access to the same tools, applications and data as they would in the office. Cycle times can be reduced if adjusters, using laptops (or some other mobile computing device) with wireless Internet connection cards and access to corporate documents, can perform the following tasks:

* Estimate damage;

* Take high-quality digital photos;

* Verify or correct claim information;

* Schedule repairs with local autobody shops;

* Process claim;

* Capture client signatures; and

* Print checks on the spot.

These functions can be completed by using laptops or handheld computers using wireless connection cards and some middleware that extends the corporate environment to field employees. In this way, adjusters can complete more of the claims process on a customer-by-customer basis. Processing the claim at the customer site allows for other parts of the claim to be worked immediately by the corporate office. Eliminating extra paperwork reduces errors and cycle times.

As the prices of laptops, wireless Internet connection cards and data service plans have fallen, the returns in fewer errors, more productive field employees and satisfied customers more than pay for the expenditure to mobilize. Celent, a research and consulting firm, confirms the need for insurers to take this route: It predicts 80% of insurers will use mobile and wireless technologies for processing claims within the next several years.

A prime example of a carrier cashing in on mobility is Progressive Corp., a company that has long touted the mobility of its claims adjusters to make and keep customers happy. Such customer service fosters loyalty and reduces churn, but best of all are the savings in quickly completing the claims transaction.

Some application integration work needs to be completed to reach this scenario, but middleware solutions are available to fit the bill, depending on what kind of budget is available. Middleware is software that connects two otherwise separate applications. What is great about middleware is it allows whatever software systems a carrier uses for processing claims, such as Mitchell, Automatic Data Processing Inc., Certified Collateral Corp., etc., to be extended to the field for use on laptops, Tablet PCs or mobile handheld devices.

iAnywhere Solutions has M-Business Anywhere, a platform that delivers Web-based content and applications to any mobile device. Deployment is rapid and provides an affordable solution for midsized to large companies. iAnywhere's product is an "always available" computing model allowing adjusters to populate claims forms and append digital photos in the absence of a wireless or Wi-Fi signal. Some mobile solutions require the presence of a wireless signal for the end-user to access forms and data. At times, however, many adjusters may want to work offline to complete forms and verify data before synchronizing with the corporate back-end system. Additionally, an "always available" model is much friendlier to the battery life of computers and handheld devices.

IBM provides a family of offerings called WebSphere Everyplace that connects field users with corporate systems. The WebSphere platform allows a carrier to deploy its core operating environment to adjusters using laptops or PDAs, Pocket PCs or wireless phones.

The December 2003 issue of Mobile Enterprise reports Allstate Corp. receives measurable benefits by equipping its claims agents with mobile technology that uses a wireless data network and grants them access to forms and tools. Allstate benefits from streamlined business practices, reduced claims payouts and increased customer satisfaction. Additionally, Allstate has experienced an increase in claims agent productivity, an increase of on-site assessments and a decreased amount of after-hours paperwork by the adjuster. Allstate has streamlined claims agents' routes by using scheduling software that routes adjusters from one site to the next. By using intelligent technology, adjusters can arrive on time, have more effective tools available and be more responsive to their customers, all of which improves customer satisfaction.

Telematics

Telematics is a wireless communications system used to collect and transmit data. Current uses are for vehicle-based electronic systems and vehicle tracking. Telematics also is used for online navigation, information services and emergency assistance. Many high-end luxury automobile manufacturers incorporate telematics into their vehicles through services that provide driving directions, roadside assistance and stolen vehicle tracking.

The capability to monitor and record how and where people drive already exists. This technology can be expanded to include sensors that monitor sections and systems of a vehicle, and if a collision occurs, record areas that only are accessible once the car is on a lift.

This technology serves insurer and insured in several ways. Carriers can offer policies to clients based on how they drive. Telematics records how many miles, how fast, how often and driving conditions. Those who don't drive at night, or do not log many miles, could pay less than drivers who are generally a higher risk by being on the road more or by driving at speeds in excess of posted limits. While many drivers may not like the invasion of privacy, plenty of customers will feel it is a fair trade to cede information for lower insurance rates.

Should an accident occur, the system could simultaneously notify emergency responders and upload crash information to the insurer's database to begin a claim. Sensors also could prepopulate a claim with information detected from the crash, such as location (Fourth and Main) damage to vehicle (rear bumper, taillights smashed, no airbags deployed) and driver history (no previous accidents, generally a safe driver, preliminarily not at fault in this instance).

Several luxury cars also include cameras mounted on the bumper assemblies to navigate the driver into parking spaces or show if there are children or pets that are hidden from the driver's vantage point. This use could be expanded through integration with telematics sensors, and if the brakes are slammed, or the car skids, slides or is hit, the cameras could begin recording the event. This would provide carriers and their customers a view of an accident and verify locations of vehicles involved and angles at which the collision occurred.

Fighting Fraud

Location-based services use geotechnology to indicate with rather good precision the location of assets within several feet. A location-based service can use cellular networks and satellite technology to triangulate between known geographic coordinates on the location of a person, vehicle or some other asset to within a few yards. This is the technology used in stolen-vehicle recovery system LoJack and direction-mapping programs. Geotechnology also can be used to fight fraudulent claims. If a multiple vehicle pileup occurs, unscrupulous drivers may try to cash in on the tragedy and secure funds to repair their vehicle containing previously unreported damage. Through geotechnology and telematics, an adjuster can see through recorded time stamps that the claimant was not involved in a particular pileup as claimed. While good in theory, this is likely not practical today due to privacy issues.

Next Steps

Even with modernization and integration of disparate systems, it is speculated that claims and the expenses associated with managing them are still around 80% of the operating ratio for property/casualty companies. If those estimates are even partially correct, it calls for further scrutiny as to how current technologies can be used to reduce those costs.

The progress in auto claims resides in the futuristic technologies being used today in automobiles, such as telematics, location-based services and on-board cameras. To put these space-age gizmos and services to work for insurance carriers is going to require property/casualty companies to work with auto manufacturers and service providers to implement features that provide returns to the insured driver and carrier.

Key Points

* New technology making a splash in other industries may soon be tweaked to provide measurable benefits to insurance carriers and their customers.

* According to research, 80% of insurers will use mobile and wireless technologies for processing claims within the next several years.

* Even with modernization and integration of disparate systems, it is speculated that claims and their expenses are still around 80% of the operating ratio for property/casualty companies.

Laura Mildon Xideris is segment solutions manager, Finance, Insurance and Retail, with Sprint Business Solutions.

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RELATED ARTICLE: U.S. and U.K. policyholders test 'Pay As You Drive'.

U.K. insurer Norwich Union is testing "black box" technology that could help underwriters peg automobile premiums to the way people use their cars. The two-year pilot, dubbed "Pay as You Drive," involves the cars of 5,000 policyholders. Telematics instruments, installed in trunks or passenger areas, will transmit information on such factors as distances traveled and whether the vehicles are used in urban or rural areas.

The devices, which are smaller than DVD cases, will send the data to the insurer via cell phone technology. Norwich Union said the instruments also would be able to report the positions of lost or stolen cars.

Eventually, Norwich Union plans to use the program to receive automatic reports of accidents and, possibly, to provide drivers with electronic route mapping.

Robert Ledger, the "Pay As You Drive" program director, said the pilot has attracted "phenomenal" interest from drivers both in the United Kingdom and abroad. He said in a statement that Norwich Union would have had no trouble attracting twice the number of participants for the pilot.

"We believe this initiative is a major breakthrough in the development of more tailored motor insurance premiums, enabling us to treat all drivers as individuals," Ledger said. "And we're confident our customers will fully appreciate the benefits, too."

Norwich Union has signed an agreement with Progressive Corp. to develop "Pay As You Drive" in the United Kingdom and Europe.

Progressive also rolled out its own version of Norwich Union's pilot called TripSense. Progressive is offering the pilot program to 5,000 policyholders in Minnesota. Participants who register a vehicle with TripSense receive a matchbox-sized data-logging device, which they plug into the vehicle's On-Board Diagnostic port. The port is located near the steering columns of most 1996 or later model year vehicles.

The device logs how much, how fast and when the vehicle is driven. Progressive uses the information to calculate the discount a customer would receive upon policy renewal. Near the end of a TripSense participant's policy period, the customer would receive software from Progressive to download the driving data to his or her personal computer. The data can be viewed by the customer and then uploaded to Progressive. Participants receive a 5% discount on the six-month premium for each registered vehicle. TripSense customers can earn a 5% discount in subsequent policy periods if they choose to upload their driving data to Progressive. They can earn up to 20% more in discounts based on how much, how fast and when they drive. Data sharing is always optional.

--Robert O'Connor and Lynna Goch